As regular readers may or may not know I started spread betting back in February 2009. I started blogging about spread betting in February 2010 as a way of keeping a trading diary and spreadbettingbeginner.com was born in October 2010 when I decided to move my journal and add more and more information that I thought might be useful to others. So you might think after nearly three years that I would be some kind of expert by now, wrong! I’m still learning and I don’t think I will ever stop.
For instance I have just started reading Alexander Elders book: Come into my Trading room(on my new Kindle which Santa delivered to me for Christmas). I’m roughly a third of the way through it and I have to say I’ve very impressed. I like his idea of the three M’s Mind, Method and Money. If you can master all three of these then you are surely on the path to trading success. To be honest I think I’m not too far off. I think I’ve made enough mistakes that now that I do not want to repeat them. Money wise I always try to keep my risk low. I have let my hard and fast rule of 1% max creep up to 3% recently as trading with a £1000 bank (even lower now after losses) is hard to find trades that only risk £10 per trade. Finding ones that only have a £30 risk is still hard enough but not has hard as £10. We’ll see how it goes, I may reduce my risk back to 1% but never more than 3% maximum.
Keeping risk low is a lesson that I, fortunately, learned very early on in my spread betting career. In fact its probably the only reason that I still have funds available from my initial £1000 that I can trade with. My plan was (and still is) to learn the ropes with this £1000 and hopefully achieve a winning way that is consistent. That remains to be seen.
On the Mind side of things I think I still need work and I don’t think I’ll ever be able to say I’ve mastered my emotions when it comes to trading. Still I think as long as I can control them enough and follow the rules I should be ok.
Then it comes to Method. This is probably the part where I have fell down the most and still struggle today. We all know that the Holy Grail of trading does not exist. It’s a myth and if your new to spread betting then stop looking for it right now. If it did exist I would’ve found it by now, I’ve been looking long enough. I think the problem with me is when my method doesn’t perform I think something is wrong and that I need another. Take my current super trend method for example. This works well in trending markets but when markets don’t trend (such as now) it’s subject to a lot of whipsaws which then casts doubt over the system. Since markets spend most of their time not trending a trend following strategy is pointless when markets are not trading. Therefore I think I need to add more strategies to my arsenal. As I mentioned a while ago I was re-reading Robbie Burns book: The Naked Trader. This has some good strategies in it and ones that analyse the fundamentals of stocks such as market capitalisation, profits, debt levels etc. I’ve decided to try and include this into my stock selection process. The idea being to look for trades based on Robbies fundamentals suggestions. Once I have a stock that I think looks good I then use Technical Analysis to find entry, stop and profit target positions. Of course this will see me looking for only long positions as the fundamental analysis is only for companies that are performing well. Anyway as the title suggests spread betting is a never ending learning curve. For all those newbies to spread betting take it from me it’s not easy. Ok so it might not take you three years but don’t forget I also work full time so I think for spread betting part time I’m going ok. I’m certainly not ready to give up just yet.
Until next time,
“May the markets be with you!”
The Spread Betting Beginner